Tesoro teams with EP Energy on drilling; closing on Western Refining deal June 1

Growing San Antonio refining giant Tesoro is getting more involved in drilling for oil thanks to a new partnership with Houston’s EP Energy.

On the other hand, Tesoro also is growing in its refining sweet spot, announcing that it plans to close June 1 on its $4 billion acquisition of El Paso’s Western Refining. The deal makes Tesoro the nation’s fourth largest independent refiner behind San Antonio rival Valero, Marathon Petroleum and Houston’s Phillips 66.

What’s more unique is the new joint venture with EP Energy to drill 60 wells together in Utah’s Uinta Basin. Tesoro will take a 50 percent ownership stake of EP’s interest in the wells, allowing the oil to feed its Salt Lake City Refinery.

Tesoro Chairman and CEO Greg Goff said the deal boosts its assets value in the Rockies and guarantees supplies for its refinery.

Still, Raymond James energy analyst Justin Jenkins noted the joint venture’s clear benefits, but said it could take away from Tesoro’s prime focus and leave investors confused regarding the strategic move further upstream.